Is The US Economy Recovering? The Market Says YES!

Stocks were up big today. All three major stock indexes rose between 0.96% and 1.51%. The DOW had a triple digit gain rising 123 points. Normally, I would talk about the performance of the major bond ETFs. I am not, today. The 10-year treasury hit a 2.0% yield today, an increase in yield of 0.6%. In a growing economy, the stock market should be rising and so should bond yields.

What was driving the market? The Unemployment Report and New Housing Starts. About 20K less people filed for unemployment claims than expected. This is the third or fourth economic statistic that confirms firms are hiring again. I don’t know where I saw this – but there was an interesting stat on why firms are hiring again. They are no longer getting increased productivity out of their work force. For the last 3 years, firms were looking for ways to do things more efficiently with less people. However, its now becoming cheaper to hire a new person than finding a way to do it with less people. A good sign.

In terms of individual companies, the US carmakers (GM, F, DAI) had a great day. GM released earnings, hitting its highest level of profitability in its history, earning over $7 billion for the year. The stock jumped almost 10%.

Also rising were the US bank stocks Citigroup, JP Morgan and Bank of America (C, JPM, BAC). The quotes used to be, “ What is good for GM, is good for America” Today, the quote should be, “What is good for America, is good for the Bank Of America.”